Gold prices dropped 2% on Monday as renewed hopes for a de-escalation in U.S.-China trade tensions boosted investor appetite for higher-risk assets, like stocks.
Market Drivers and Price Movement
Spot gold fell to $4,029.69 per ounce by 1122 GMT. The metal has retreated over 5% since hitting its recent record high of $4,381.21 on October 20.
U.S. gold futures for December delivery saw a corresponding loss of 2.3%, dropping to $4,042.80.
The primary downward pressure came from eased trade worries after President Trump indicated the U.S. and China were close to a trade deal framework. This news sent Asian stocks surging and encouraged a shift away from safe-haven assets like gold.
Other precious metals also declined, with spot silver down 2.3%, platinum easing 0.8%, and palladium losing 0.8%.
Focus on Central Bank Meetings
Investors are now focused on upcoming major central bank meetings, particularly the Federal Reserve (Fed), for clues on future interest rate cuts.
The Fed is widely expected to cut rates by 25 basis points on Wednesday, a move largely priced into the market. Lower interest rates generally benefit non-yielding gold.
UBS analyst Giovanni Staunovo noted that while a potential trade deal is weighing on gold now, lower tariffs could actually allow the Fed to cut rates further in the long term, which would still support gold demand.
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